Correlation Between Citigroup and Federated Intermediate
Can any of the company-specific risk be diversified away by investing in both Citigroup and Federated Intermediate at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Citigroup and Federated Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Federated Intermediate Municipal, you can compare the effects of market volatilities on Citigroup and Federated Intermediate and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Citigroup with a short position of Federated Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Federated Intermediate.
Diversification Opportunities for Citigroup and Federated Intermediate
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Citigroup and Federated is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Federated Intermediate Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Intermediate and Citigroup is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Citigroup are associated (or correlated) with Federated Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Intermediate has no effect on the direction of Citigroup i.e., Citigroup and Federated Intermediate go up and down completely randomly.
Pair Corralation between Citigroup and Federated Intermediate
Taking into account the 90-day investment horizon Citigroup is expected to generate 6.74 times more return on investment than Federated Intermediate. However, Citigroup is 6.74 times more volatile than Federated Intermediate Municipal. It trades about 0.27 of its potential returns per unit of risk. Federated Intermediate Municipal is currently generating about 0.25 per unit of risk. If you would invest 6,889 in Citigroup on September 14, 2024 and sell it today you would earn a total of 307.00 from holding Citigroup or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Citigroup vs. Federated Intermediate Municip
Performance |
| Timeline |
| Citigroup |
| Federated Intermediate |
Citigroup and Federated Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Federated Intermediate
The main advantage of trading using opposite Citigroup and Federated Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup position performs unexpectedly, Federated Intermediate can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated Intermediate will offset losses from the drop in Federated Intermediate's long position.The idea behind Citigroup and Federated Intermediate Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Federated Intermediate vs. Federated Emerging Market | Federated Intermediate vs. Federated Mdt All | Federated Intermediate vs. Federated Mdt Balanced | Federated Intermediate vs. Federated Global Allocation |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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